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A hacker stole crypto funds from customers making deposits at General Bytes Bitcoin ATM machines, according to an advisory published this week.

The hacker modified the crypto settings of two-way machines with his wallet settings and the invalid payment address setting, the company said in an advisory published Thursday. Bleeping Computer first covered the news.

“The attacker was able to create an admin user remotely via CAS administrative interface via a URL call on the page that is used for the default installation on the server and creating the first administration user,” the statement said.

The company published steps to take to implement a security fix published on its website. It said that in the multiple audits it has completed since 2020, it had not identified this vulnerability.

The attack happened on the third day after the company publicly announced a “Help Ukraine” feature on its ATMs, the advisory said.

The company didn’t specify how many people were affected by the hack or how much crypto was stolen. The firm was not immediately available to comment when reached.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Just as the week was wrapping up, news of a cease-and-desist letter from the Federal Deposit Insurance Corporation (FDIC) addressed to FTX and other crypto firms came out.

Here’s a look at some of the crypto-related regulation headlines from the past week.

Push and pull from the Fed

New guidance from the Federal Reserve Board gave crypto firms aiming to get a master account a reason to celebrate. While the guidelines are not hard rules they standardize consideration for master accounts for firms with “novel charters.” Those can include cryptocurrency custody banks and their trade associations.

On the other hand, a Federal Reserve Governor is pumping the breaks on the creation of a US central bank digital dollar (CBDC). In a recent speech, Governor Michelle Bowman appeared to show a preference for the FedNow Service over a US CBDC.

The road to a new EU regulator

The European Union may be close to creating a new anti-money laundering regulator overseeing crypto. The “Anti-Money Laundering Authority” would come from a package of legislation the European Parliament will consider after the ongoing August vacation. If passed, it will be the subject of negotiations with other bodies.

FDIC’s quest for clarity on crypto

The FDIC took action against a number of crypto firms including FTX over “false and misleading statements” about federal deposit insurance. The recent collapse of firms like Celsius and Voyager has raised questions about how the safety of deposits was represented to clients. The FDIC, along with the US Federal Reserve, sent a cease-and-desist letter to Voyager in July stating the now-bankrupt firm falsely transmitted to customers that they “would receive FDIC insurance coverage for all funds provided to, held by, on, or with Voyager.” The agency later reaffirmed the point that Crypto companies are not protected by federal deposit insurance issuing a new fact sheet about it.

In other news related to the FDIC this week, a Pennsylvania Senator said in a letter that the agency “may be improperly taking action to deter banks from doing business with lawful cryptocurrency-related (crypto-related) companies,” for example asking them to avoid providing credit.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto markets surrendered gains this week as financial markets began to cool around the globe on persistent macroeconomic fears. 

Dog-themed memecoin’s were outperforming the market earlier in the week, although most surrendered the gains as Shiba Inu carried the momentum through to the weekend. Shib is up roughly 4.6% over the past seven days, trading at $0.00001322 at the time of writing, according to CoinGecko. 

$210 million of bitcoin long positions were liquidated on Friday and as a result crypto markets fell sharply. Bitcoin and ether shed roughly 12% and 18% respectively, as bitcoin hit a three-week low.  Bitcoin was trading at $21,414 at the time of writing, while ether was trading hands for $1,617, per CoinGecko data. 

Here’s what key players had to say about this week’s price action and what to watch for next week: 

Market cools on The Merge as macro leads the way 

QCP Capital noted the bearish turn in crypto prices this week in Sunday’s market update. The market maker went on to say that while there hasn’t been a specific trigger for the sell-off, the following events contributed to a negative turn in risk sentiment:

First, Fed officials have been actively pushing back against the idea that the better-than-expected CPI print on August 10 might lead to less aggressive policy and rate hikes. “This has led to equities stalling and trading lower, yields drifting higher and USD rallying across the board,” according to QCP. 

The Singapore-based firm also alluded to rumors that Jump Crypto might dump a large amount of its ether holdings ahead of The Merge as having “contributed to the rush to take profit on ETH longs.” 

The firm concluded by saying that “significant profit taking led to liquidations of levered long positions built up over a strong month-long rally.” This was most notable in ether, which has rallied more than 130% on the back of The Merge narrative, the firm said.

Chicago-based crypto trading firm Cumberland shared some thoughts on the more positive aspects of the crypto market on Thursday:

“Unlike the apathy which was a defining characteristic of crypto winters past, the current market (despite its many challenges) boasts a spectacular amount of trading activity,” the firm’s head of trading, Jonah Van Bourg, wrote on Twitter.  

Van Bourg wrote that bitcoin and ether are slightly exceeding the daily volume of S&P 500 derivatives on major exchanges, which is notable for several reasons.  

“Primarily the notion that the digital asset space has matured to a point of adoption where volumes and open interest rival (or exceed) those of the most important products in the financial world,” he wrote.  

NFT floor prices show signs of changing

The floor price of Bored Ape Yacht Club (BAYC) NFT rose above that of Larva Labs’ CryptoPunks for the first time in December 2021, but over the weekend CryptoPunks again had a higher floor price – briefly on Saturday, then again at the time of writing on Sunday.

The floor price is the lowest price at which a type of NFT is currently available for sale; at the time of writing this was 65.99 ETH for BAYC, down 0.3% in the last day and 66.45 ETH for CryptoPunks, up 0.6% in the same period, according to CoinGecko. Whether CryptoPunks can maintain this position is uncertain, having already briefly gone above BAYC on Saturday before surrendering the top spot again. 

NFT prices have suffered over the last few months as crypto markets went through a tumultuous period in May and June. As Ethereum-based NFTs are valued in ETH, the fall in its price has affected the value of NFTs when measured in dollar terms. 

Furthermore, the changing market dynamics over the summer months affected not just the floor price but also the volume of sales for BAYC and CryptoPunks.  In fact, CryptoPunks outperformed BAYC between August 8 and August 15 in terms of trade volume, clocking up $9.46 million in volume versus BAYC $9.38 million. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

As we head into the last full week of August, despite much of the world being on holiday, the unsleeping crypto market may serve up yet more surprises. 

While it’s hard to imagine what might happen next in crypto, here are the stories we expect to set tongues wagging — from Tornado Cash developments to earnings updates. 

The next chapter for Tornado Cash

This weekend, The Block’s Tim Copeland reported that privacy advocates and family of the arrested Tornado Cash developer Alexey Pertsev protested in Amsterdam. 

On August 12, Pertsev was arrested by Dutch authorities in the Netherlands, two days after the US government sanctioned Tornado Cash — claiming it was used to launder stolen funds for North Korean actors. Dutch authorities claimed the people behind Tornado Cash made large-scale profits from those transactions.

Amid protests, a decentralized autonomous organization (DAO) associated with the sanctioned crypto mixer had been discussing ways in which it might challenge the US sanctions in the wake of the arrests before its governance forum was taken down. 

The coming weeks will pose a test for the legal parameters placed around code, in a case that is likely to set precedents for the industry on multiple levels. 

All eyes on prices

Bitcoin (BTC) and ethereum (ETH) experienced their famed volatility over the weekend, with bitcoin once again hovering around $21,000 and ether flirting with the $1,600 mark on Sunday.

Risk-off behavior will be something to watch for as the US reports an updated GDP reading and some economists anticipate a technical recession. 

A new chapter of the Galaxy-BitGo saga

Has Galaxy Digital bitten off more than it can chew? We may see new developments after the unceremonious cancellation of the proposed $1.2 billion Galaxy-BitGo merger.

Last week saw Galaxy call off the tie-up and state that no termination fee was payable. Later that day, Galaxy begged to differ. 

In a statement shared with The Block, BitGo said it “intends to take legal action against Galaxy Digital for its improper decision to terminate the merger agreement with BitGo, which was not scheduled to expire until December 31, 2022, at the earliest and to not pay the $100 million reverse break fee it had promised back in March 2022 in order to induce BitGo to extend the merger agreement.”

Chart: The Block Research

Many questions remain as to what the way forward may look like for the pair. The Block Research’s Greg Lim asks: “With the broader market in a slump and the deal not closing, will BitGo be required to raise additional capital at a down valuation?”

Earnings updates

Despite a quiet docket in terms of earnings updates, we can expect a second-quarter report from bitcoin miner Iris Energy on Wednesday. The company had doubled its hash rate to 2.3 exahash per second (EH/s) earlier in August, after completing phase two of its Mackenzie site in Canada. 

Chip maker Nvidia is also set to report for Q2 on Wednesday. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Decentralised metaverses will be decentralised in name only if action is not taken to address digital property rights, according to a new Galaxy Digital report on non-fungible token (NFT) licenses.

Published on Friday, the report authors — head of firmware research Alex Thorn, Galaxy Legal director Michael Marcantinio and Galaxy Research’s Gabe Parker — warned that if the digital property of the metaverse is not owned by its users, the technology could provide the designs for something like an all-encompassing social credit system.

“If these problems are not addressed now, the supposed decentralized metaverses will not materially differ from those being built by Web2 giants like Meta (Facebook),” they said.

The report looked at metaverse licensing agreements for The Sandbox and Decentraland in order to understand how real-world copyright and trademarks are perceived in the metaverse landscape. It concluded that both do a “decent job” of attempting to assign ownership to their users for user-generated content, but in both cases the companies retain all intellectual property related to the sales of land parcels in their metaverses, merely assigning usage rights to NFT purchasers.

But even if users own the rights to user-generated content, there is no guarantee that the operator of a metaverse will support it within their virtual world. Content moderation policies allow them to ban or remove content regardless of IP rights.

“Simply owning the rights to a custom-made character skin, for example, does not guarantee that Decentraland or Sandbox will allow the skin to be used within the game… absent a third-party alternative world in which to deploy your user-generated content, its effective use relies upon the consent of the metaverse operator,” they said.

It also took aim at Yuga Lab’s upcoming metaverse project, Otherside, and its land NFTs, Otherdeeds. NFT token holders have commercial rights for other Yuga Labs collections such as the Bored Ape Yacht Club, however Otherdeeds do not grant these.

“The Otherside agreement is explicit that purchasing Otherdeed NFTs conveys no intellectual property rights,” noted the report.

Responding to the report, Sandbox COO and co-founder told The Block that, owing to tokens in its ecosystem being on the blockchain, they have the ability to be used on other platforms or sold on marketplaces. 

“We believe we are still delivering the decentralize metaverse approach that differs from the one built by Web2 giants, where users have no control and no ownership whatsoever of their digital content and data,” he added, also noting that, as per the company’s roadmap, the content moderation process itself is set to be decentralized. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto exchange FTX generated more than $1 billion in 2021 revenue after making only $90 million the year before, according to a new report from CNBC.

The growth was driven by its global trading business, according to the report, which cites internal documents. It also states that FTX raised its operating income from $14 million in 2021 to $272 million last year, and its net income rose from $388 million to $17 million in the same time period. 

FTX generated $270 million in revenue in the first quarter of 2022 and was on track to generate $1.1 billion this year, according to an investor deck seen by CNBC, which notes that it is not clear how the market crash from earlier this year affected the firm.

Founded in 2019, FTX quickly rose to become a leading exchange under the leadership of CEO Sam Bankman-Fried. 

Lately, Bankman-Fried has been pursuing acquisitions and has stepped in to lend money to crypto companies facing liquidity crises. In July, FTX US struck a deal with crypto lender BlockFi that gives FTX an option to buy the firm and was in talks to buy South Korean crypto exchange Bithumb. That followed the acquisitions in June of crypto trading firm Bitvo and the clearing firm Embed.

FTX declined to comment to CNBC on the leaked financials. But Bankman-Fried appeared to confirm on Twitter that the numbers in the report are in the “correct ballpark.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Stephan Tual, one of the main designers behind the structure of The DAO, has left the Ethereum community after nine years — citing a disconnect between what he wanted to build and what he feels the project has become.

“I cannot, in good conscience, continue to act like ‘all is well’ in Web3,” he wrote in an email to the Ethereum London meetup, announcing that he is stepping down from running the meetup and leaving the Ethereum community more broadly.

Tual provided more details in a separate Reddit post. This post addressed a set of perceived criticisms and fraudulent claims around The DAO and software company Slock.it’s part in it. It also went further into his disconnect with the current state of Ethereum.

“As of August 15th, 2022, the ‘blockchain’ (or should I use the hedge-fund coined terminology ‘distributed ledger’?) has turned into a circus of centralized NFTs, endless Ponzi schemes, illegal securities or turncoat sycophants pledging loyalty to the nearest regulator. I do not recognize myself in that space, not even one bit,” he said.

Tual added that he now intends to focus on other technologies including mesh networks and software-defined radio communication. 

What role did Tual play?

In January 2014, Tual joined the Ethereum project as chief communications officer. He worked there until September 2015, when he left to create Slock.it, which created a framework for building DAOs in 2016. That year, a large community of developers took the framework, in coordination with Slock.it, and used it to launch what became known as The DAO.

The DAO was the first major attempt at a truly decentralized autonomous organization focused on crowdfunding. It attracted a lot of investment — up to 15% of all ether (ETH) in circulation at the time — before a bug in its code was exploited. The issue was so severe that the Ethereum blockchain ended up forking, resulting in the Ethereum we know today and Ethereum Classic.

Following the collapse of The DAO, Tual faded from the limelight but remained active in the Ethereum community. He left Slock.it in 2017 to create a crypto-focused incubator and continued running Ethereum events in London.

As for who exploited the bug in The DAO, Tual didn’t provide any details, but noted that, “the truth WILL out, eventually.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

A group of about 50 crypto and privacy advocates are protesting the arrest of Tornado Cash developer Alexey Pertsev in Dam Square, Amsterdam. Pertsev’s wife helped organize the demonstration and is taking part in it.

On August 12, Pertsev was arrested by Dutch authorities in the Netherlands, two days after the US government sanctioned Tornado Cash — claiming it was used to launder stolen funds for North Korean actors. Dutch authorities claimed the people behind Tornado Cash made large-scale profits from these transactions.

Those protesting argue that Pertsev should not be held responsible for writing open-source code, regardless of how it’s used by bad actors.

Family, friends and privacy advocates protest the arrest of Alex Pertsev in Amsterdam. Image: Magistr.

“The accusations against Alex threaten to kill the entire open-source software segment. No one will dare to write and publish open-source code, no one will invest in the segment if they could be made responsible for the use of the tool they created by other parties,” stated the event page for the protest.

Oxorio co-founder Petr Korolev said on Twitter that Pertsev has not been officially charged, but has been interrogated about his role in developing the protocol.

“On the one hand, Alex is my friend, I am worried about him, his wife has been unable to visit him for two weeks, and we don’t understand what is going on,” said Korolev.

“On the other hand, this is a major case, and I am afraid that if Alex is found guilty, that will create a precedent that could hit open-source code developers,” he said.

A Telegram group set up to coordinate the protest includes Yearn Finance core developer Banteg and Aave founder Stani Kulechov. Comments in the group suggest there might be a second protest in London in the next few weeks.

Almost 1,500 people have signed a petition protesting Pertsev’s arrest and calling for developers to maintain the right to write open-source code.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Traders going long on bitcoin were hit by $210 million in liquidations on Friday as the crypto market dropped. It was the biggest liquidation event since June, when the market collapsed in the wake of widespread rumors about the potential insolvency of Three Arrows Capital (which turned out to be accurate).

According to The Block’s Data Dashboard, Friday’s liquidations fell short of the main $343 million long liquidation in June, but were greater than the secondary long liquidation event, in June, of $187 million. Yesterday’s liquidations were met by just $16.4 million in short liquidations.

The liquidations came as the crypto market had been more bullish, with bitcoin having rebounded from lows below $20,000 and ether performing even more strongly ahead of The Merge that is scheduled to take place next month. 

Yet the market, which had largely been trading sideways all week, fell sharply on Friday. Bitcoin dropped from $23,000 to below $21,000 — causing the liquidations — while ether declined from about $1,800 to $1,600. Overall, the total crypto market lost about $112 billion and almost touched the $1 trillion mark. There has been little revival from these lows so far.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Last week was relatively quiet in the crypto world, but there were still some key developments.

Chief among them was the collapse of Galaxy Digital’s planned acquisition of BitGo, which may lead to a messy lawsuit. There were also several important hires and exits. Plus, FDIC issued FTX a cease-and-desist order.

Galaxy and BitGo deals falls apart

At the start of the week, Galaxy said it was terminating its long-awaited acquisition of crypto custodian BitGo. It claimed that BitGo had failed to deliver audited financial statements for 2021 within the requirements of its agreement. It also said that no termination fee would be payable.

BitGo saw it differently. It’s lawyer said blaming the fallout on BitGo was “absurd.” The company remained defiant, saying that it intends to take legal action, either seeking a stated $100 million break fee or more in damages.

Big hires and fires

Let’s start with the good news. Adam White, former president and COO of bitcoin custody provider Bakkt, has joined Blackstone as a senior adviser. He will help the firm and its portfolio companies’ executives understand and think critically about the crypto world. This comes just after BlackRock — which originally launched under the Blackstone umbrella — pushes further into the crypto space through a partnership with Coinbase and the launch of a bitcoin-focused trust fund.

On top of this, Arbitrum has hired its first chief marketing officer. Andrew Saunders, former head of Amazon’s global brand marketing team, will lead and oversee all marketing and communications efforts worldwide. This comes shortly after Arbitrum’s launch of Arbitrum Nova, a chain focused on scalability for gaming and social applications.

Now for the bad. In July it was revealed that Genesis lent $2.36 billion to now-bankrupt firm Three Arrows Capital, a move that resulted in a claim for $1.1 billion of assets. Genesis CEO Michael Moro stepped down last week to make way for new leadership. The company is also cutting 20% of its staff.

FDIC Vs FTX

On Friday, the Federal Deposit Insurance Corporation (FDIC) issued cease-and-desist letters to FTX US and four other crypto companies for allegedly making “false and misleading statements” about federal deposit insurance, wrote Aislinn Keely. 

The key issue was over statements that said FTX US deposits were held in FDIC-insured accounts. The FDIC said these statements implied that the crypto products and services were themselves insured — which it said was not the case. 

The letter directs FTX US to immediately remove any and all statements that suggest the exchange and any funds deposited with it are FDIC-insured.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.